This week, a momentous congressional committee is on the brink of voting on a series of legislative proposals intended to establish a comprehensive regulatory framework for cryptocurrencies.
This signifies a pivotal milestone in the ongoing endeavors of Capitol Hill to institute federal oversight for the rapidly burgeoning digital asset industry.
The crypto market has come under intense scrutiny in the aftermath of last year’s high-profile collapses of Celsius Network, Voyager Digital, FTX, and other firms, which left investors reeling.
Responding to mounting concerns, the House Financial Services Committee is now gearing up to appraise several bills, including one that endeavors to distinguish between cryptocurrencies as securities or commodities, and another that focuses on supervising stablecoins, the digital tokens typically backed by conventional assets like the US dollar.
The imminent markups, where lawmakers will deliberate and cast their votes on the proposed bills, are unprecedented in the context of crypto regulation in Congress. For crypto lobbyists, who have persistently advocated for regulatory lucidity, this marks a momentous triumph.
Nonetheless, the fate of the bills remains uncertain, as they may encounter challenges in garnering support from Democrats. The backing of Democrats is deemed crucial for the bills to stand a chance at becoming law. The Democratic-led Senate may also pose obstacles.
On the committee front, Representative Patrick McHenry, the Republican chair, has affirmed his dedication to advancing a crypto market structure bill.
This legislation seeks to broaden the Commodity Futures Trading Commission’s oversight of the crypto industry while clarifying the Securities and Exchange Commission’s (SEC) jurisdiction. Crypto proponents have often censured the SEC for perceived overreach.
The crypto industry has rallied around this bill, with hopes that bipartisan support could pave the way for success in the Senate. Miller Whitehouse-Levine, CEO of the DeFi Education Fund, a lobbying group focused on decentralized finance, underscored the significance of bipartisan backing.
One of the fundamental issues the bills seek to address is the lack of clarity surrounding cryptocurrencies. The SEC has increasingly asserted its authority over the industry, treating most cryptocurrencies as securities and subjecting them to investor protection rules.
Yet Ripple’s XRP cryptocurrency is no longer categorized as a security following a recent substantial court triumph against the SEC.
Another bill set to be considered would necessitate the Federal Reserve to define requirements for issuing stablecoins while preserving the authority of state regulators.
This move comes in response to concerns from some Democrats that stablecoin issuers could potentially evade stricter oversight by opting for state regulation.
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